The Israel Tax Authority is looking to boost the state coffers from players who have cashed in on the rise in Bitcoin price
According to a press release from the Israel Tax Authority (ITA), it seems the agency is aiming to boost state coffers from players who have poured cash into the Bitcoin price rise. Because they have required dozens of Israelis owning cryptocurrency to fully disclose their assets information and tax reports accordingly.
The tax assessors across the country have put begun pressure on cryptocurrency, such as Israel Tax Authority
In the opinion of the tax authorities in 2018, investors in digital currencies are subject to a 25% capital gains tax, as long as their activity does not turn into a commercial enterprise. If the activity does become a business, proprietors will be charged a two-stage corporate tax, or a marginal tax according to the individual tax brackets.
Therefore, following the regulations, the Israeli tax authority has also sent requests to crypto exchanges operating in Israel and exchanges outside of the country with similar requests to individual users.
Reports of notices and questions were submitted by the revenue collection agency before Israeli media speculated that tax assessment authorities across the country were putting pressure on the digital currency market. However, the real ITA only wants to collect information about Israelis trading in these currencies. Before sending notices and questions to crypto exchanges, Israel’s revenue collection received data on European-based funds and accounts held by Israelis.
Israel receives this data in line with the EU Common Reporting Standards (CRS) regulations for the automatic exchange of financial account information. Similarly, the Israeli tax collector is reported to have a different arrangement with its counterpart in the United States.
The report stated:
“Additional information comes through the FATCA agreement, which conveys the US Internal Revenue Service (IRS) data to Israel.”
Meanwhile, tax authorities’ interest in taxing cryptocurrencies is closely related to the revival of the cryptocurrency market. Especially the price jump of Bitcoin, coupled with a huge demand to fill the state coffers.
However, if this becomes a commercial activity, the owner will be charged a two-stage corporate tax or marginal tax under a separate tax bracket. In the meantime, the Israeli Tax Authority letters are sent to owners of Israeli cryptocurrencies encouraging them to voluntarily report their earnings before the tax authorities pass them on.
Information received by the authorities from the trading exchanges is usually just the beginning because we’re talking about the address of a Bitcoin wallet that’s made deposits or withdrawals. With the right technology, using an address, it’s possible to trace the entire wallet and even reach wallets and platforms that haven’t been properly reported. This leads to a significant increase in tax collection from those who have already filed returns, as well as those who haven’t.
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